Happy New Year to everyone. It will be interesting to see how 2025 turns out.
Unfortunately, it appears we’re entering into a period of tremendous uncertainty. This is not only because of the incoming US administration/tariffs but also political uncertainty at home and all the “normal” issues, such as climate change and income disparities.
Finance also threw in another one relating to extending the giving deadline for 2024 that we discussed here. It will provide for some nimble charities perhaps a short term benefit but for others it may create some headaches.
What should Canadian registered charities do to be able to best respond to this uncertainty and the unremitting changes confronting the charity sector. Here are a few ideas that may be helpful.
- Review your legal purposes and ensure they are broad enough for your current activities and activities that are anticipated over the next few years. Covid was a wake-up call that narrow objects might be fine for decades but then become very constraining if the world changes. Charities can only carry out charitable activities that are within their legal purposes. Most charities have old and inappropriate charitable purposes, and they should be changed. CRA review can take 8-10 months, and they will require a detailed statement of activities. It is best to start the process early.
- Ensure that your charity has an adequate reserve fund. There is no one-size-fits-all. You should have a reserve fund policy which sets out what your particular situation is in terms of revenue and expenditures, etc.
- Prepare for reduced revenue by planning ahead, including ensuring that you have lines of credit. When you don’t need a line of credit, they are easy to obtain, but when you need them, it is often going to be impossible. Also while many charities are very frugal others have lots of questionable or unnecessary expenses and now might be a time to review your operations and expenses.
- Ensure that you are on the CRA MyBA system so that if you need to deal with CRA, it can be done expeditiously. Also, clean up the list of people who are authorized to represent your charity as many will have people who are authorized, and they don’t even know who they are or perhaps they were someone involved in the charity 20 years ago. Many CEOs and CFOs discover to their consternation that they are not authorized with CRA and it can a month or two to get authorized. It’s not great when you are trying to deal with an urgent matter.
- Work on improving cyber security. It is both a matter of software and training.
- Understand your compliance requirements. Many charities have far more flexibility to do charitable activities than they think, but unfortunately, they don’t understand the rules for registered charities, including direction and control, business activities, political activities, fundraising, purposes, etc. Take a course or attend the webinar dealing with compliance from someone who’s knowledgeable. Just to make it easier, we have over 25 online courses, and if you sign up before January 15, 2025, to any of them, you can have a 20% discount. Here is the code: HNY202520PERCENT Here is a link to all our courses.
- If you don’t have a charity lawyer that you deal with, consider retaining one so that you have someone who understand your organization and can easily assist when needed. If you want to contact us, you can do so here.
We hope that 2025 turns out to be a better year than many are expecting.